40 or 50 year home loan

Back in May 06 I wrote that the US has introduced the 50 year home loan

Well here it is now reported Westpac and the Commonwealth Bank confirmed they would consider introducing mortgages over 40 or even 50 years.

As I said back then the 40 or 50 year home loan is effectively an interest only home loan. The borrower is hardly making any dent into principal repayments on an annual basis. You better hope that the capital value of your house goes up. Though that is not always the case and is not guaranteed.

And as is starting to be reported, there is more and more middle class default and bankruptcy petitions. Bankruptcy is no longer the reserve for the lower income or failed entrepenuer.

The 50 year mortgage does not help the Borrower ever get ahead in reducing the principal owing on their mortgage and creating a buffer against unexpected hard times. Combine this with 95% Loans, where are we heading?

Am I being overally pessimistic? Interest only loans have been popular for a long time with investors. But for a long time now, first home buyers are buying into an expensive market it may appear a godsend until things start to go pear shaped. A once often quoted rule was banks would lend you 3 times your annual earnings. Now it might be 4 times. But with, say Sydney as an example, the cost of the median house is 8 times your average annual earnings. Things aint easy.

When looking for property The Age claims only 2% use just the internet

Statistics.
There are three kinds of commonly recognised untruths:
Lies, damn lies and statistics.
- Mark Twain

Here's a direct quote from the Age Domain Property Section
"When looking for a property 84% of people use newspapers. 45% use newspapers only and 39% use newspapers and the internet equally. Only 2% use just the internet.

Make of that what you want. Quoting another source 98% of all properties for sale are advertised on the web and are responsible for 50% of all resulting sales.

Let's just do the quick test of listed properties for sale in Brighton & Brighton East

• realestate.com.au 200+
  
• The Age Domain 66
  

The statistics tell me there are at least three times more properties for sale on the net. The ratio is 3:1. And this is only for a single demographic - Brighton - upper income blue chip. I understand areas like the Mornington Penisula the ratio is actually much higher.

The quote from Mark Twain is accurate; statistics are often used to lie to the public because most people do not understand how statistics work. I am not saying the Age is making it up. They are quoting from research carried out by Quantum Research. But you sure do need to question things when statistics are quoted, especially the quotation of favourable numbers.

Agents, vendors and buyers dont lie - they know where the value and utility lies. All too often print advertising for many properties is just not part of the marketing mix.

And I think Murdoch deserves the last word when he forecast a gloomy future for newspapers with the growth of the internet, saying he doesn't know "anybody under the age of 30 who has ever looked at a classified ad".

The owner of the Herald Sun, Sun, Times, Sunday Times and the News of the World, who once described newspaper classified advertising revenue as providing "rivers of gold", now says: "Sometimes rivers dry up".

This is a generational change.

Microsoft Plan for the Future - All roads lead to the Internet

The company detailed how it was spending heavily on building Internet services into its products, but that any payoff from the effort would not come for a few years. Microsoft executives reporting to analysts Washington 27 July 2006

Microsoft’s size and broad portfolio of products, the executives said, would prove an advantage in competing against Google, the current leader in Internet services. Internet search, according to Microsoft, will increasingly become seamlessly integrated into the Windows desktop operating system, Office productivity software, cellphones powered by Windows.

Microsoft executives acknowledge that as computing increasingly gravitates to the Web and often toward ad-supported services, it creates both a technical and business challenge for a company whose great strength is in personal computer desktop software.

But the Microsoft vision is that Internet services can complement rather than cannibalize the company’s traditional business if they are built into products like Windows.

“Microsoft’s current offerings represent a huge advantage that we can migrate into this services world,” said Ray Ozzie, the chief software architect.

TdF is over for 06

spare bikes., originally uploaded by misscaro.

Banks failing in the online environment

The Age reported Four of Australia's largest banks have received the thumbs down in a review of their online banking systems with the ANZ emerging as "the best of a bad bunch".

An independent study by US research group Forrester, found that illegible text, poor layouts and missing information were just some of the major design flaws that forced customers to turn to more expensive call centres and branches, or even to seek out alternative offerings from competitors.

Presentation was cited in the report as being the most common shortcoming of the websites, all of which were hampered either by illegible text, missing content or poor page layout.

"To effectively use its [Westpac's] site, users need the dexterity of a 15-year-old to accurately use the rollover menus, a magnifying glass to read the text, and a lot of patience to made through the material," the report said.

An example quoted was ANZ made its customers click through five pages before they could even get started on a home loan application after attempts to apply directly from the home loan page failed.

CBA lost points because its home page gave no indication that visitors could actually research and apply for a credit card or home loan online, and it was also missing important data such as key credit card fees.

The reported concluded all the Big 4 could take a leaf out of and learn from international peers such as www.bankofamerica.com which uses a tab system to present rates and fees without clutter.

Source The Age - Louisa Hearn

NECS - Updates to the National Business Model

At its meeting in early June 2006 the National Steering Committee guiding the development of electronic conveyancing considered a couple of significant changes to the National Business Model (NBM).

New Definitions of Industry Roles
The announcement by the Victorian Government in January 2006 that it intends to regulate conveyancers in Victoria with a licensing scheme similar to those already in place in NSW, SA, WA, NT and Tasmania provided the opportunity to tighten up the definitions of industry roles that will use the NECS to conduct electronic conveyancing.
The model now provides for three distinct roles:

1. Subscribers, who are the insured user of the NECS and generally a corporation, partnership, government agency or sole trader


2. Users, who are employees or contractors of the Subscriber and work under the Subscriber’s day to day supervision preparing the information required for settlements and lodgments


3. Certifiers, who are Users as well as legal practitioners, licensed conveyancers, or employees or contractors of the Subscriber specially authorised by the Subscriber to certify and sign instruments and settlements on its behalf

These changed arrangements provide a much stronger control framework for the benefit of all participants in electronic conveyancing and their benefits include:

• clear allocation of respective responsibilities in use of the NECS


• full control for Subscribers over who is covered at any time by their professional indemnity and fidelity insurance


• confidence for all transacting parties that only regulated practitioners can certify and sign instruments and settlements


• flexibility for practitioners and non-practitioners to work for multiple legal and/or conveyancing practices


• freedom for practitioners to use the same digital signature certificate with multiple concurrent or sequential employers.

National Licensing of Licensed Service Providers (LSPs)
The previous intention to license LSPs separately in each jurisdiction has been changed to a single licensing system determined and managed by the NECS. The change will:

• reduce duplication in licensing processes


• provide greater market scope for and competition among LSPs


• benefit Subscribers who choose to use an LSP to connect to the NECS.

All jurisdictions and potential licensees are to be consulted on the criteria and process for licensing LSPs. By LSPs I presume this will mean the current list of certificate brokers and possibly legal software providers.

Source Electronic Conveyancing in NSW - Newsletter No. 19

Email - what not to do or how to do it right

My experience tells me that most lawyers and law firms have yet to focus on picking up their game in the technology stakes. I get giddy when I do receive an email from a fellow practitioner with a PDF attachment, the attachment being the firm’s letterhead and correspondence therein. Only yesterday that was the case when I received email correspondence from Dibbs Abbott Stillman as a PDF as well as a PDF attachment of the Lessee’s Notice of Objection. The documents are sent and received exactly as the sender intended, just as if they were sent by Her Majestys Postal Service. This was a clear example of what to do, not what not to do.

I don’t wish to sermonize on what not to do. But if you are going to use email as a delivery mechanism for legal correspondence don’t use the firm’s letterhead by sending a Word attachment. That’s just not kosher for any number of reasons, security and authenticity being the top 2 reasons not to. So most likely your firm letterhead is a Word template. You have just finished typing your correspondence. Instead of printing the Word document to the HP / Xerox Printer, you print to PDF (as long as you have the correct PDF software installed). Attach the PDF to the email. That's all you have to do. And secondly you have an electronic copy for archiving.

Link to an article Please don't send me Microsoft Word documents

Follow the good practice of Dibbs Abbott Stillman.

And that goes double for the Law Firms that dont yet use email and dont have any email address printed on their letterhead. I would say 90% plus of my clients have email. Email does have its problems (spam) and detractors but it is still a fantastic efficient form of communication for legal practices and clients.

Music not a product - its a service

The digital age reflects this new paradigm - delivery of a service - pure and simple.

Download the song.

Ninety eight per cent - 98%

98% 98% 98% 98% 98% 98% 98% 98%

98% of all properties for sale are now advertised on the internet, and half of all sales are transacted primarily on the basis of internet advertising. Source: Real Estate Institute of Australia

98% or even 99% is about as close to 100% as you'll get. There will always be a number of properties that sell without being listed on the net. They would generally be off market transactions or sold after being "just listed". It reminds me of restaurant ratings or even wine scoring. Some guides employ stars like the Red Michelin guide others rank the restaurant on a point scale out of 20. There is one point of view that a restaurant cannot ever achieve a perfect score thus the best score you can achieve is 19 always leaving room for the restaurant to innovate and theorectically do one better. Pierre Gagnaire, famous French chef and Former apprentice with other famous chef Paul Bocuse opened a restaurant in Saint-Etienne in 1992 for which he obtained an impressive 19.5/20 mark in the Gault-et-Millaz Guide and 3 stars in the Michelin Guide.

BTW - have you ever seen a wine given a perfect score 100/100 or would it justly deserve such an accolade ?

So there you have it - property listings online vis a vis restaurant guides.

Spell Checkers - dont forget to use them!

This piece fo gobbledy gook was form a slocitor I have a lot fo repsect fro - What was she thinking ?

"Settlement has now taken place and the full $85,000.00 has been advanced to your client by our clients. The St george loan had bene repoaid and the kleys to your clioents unit wree receioved at settlemtn and have bene giv en to our cleitn soit hand to your client." sic sic sic ....

This was almost topped by a resume that I received where the applicant could not even spell her own address correctly. Also did I need to know that she had been employed as an usherette with Hoyts?

Title Fraud

Do I rightly or wrongly sense a general fear amongst legal practitioners that when the duplicate Certificate of Title is eliminated under the EC regime, title fraud will make a sudden unwelcome appearance, as if it doesn't exist now?

I dont know the statistics on title fraud, but I do know it does exist today. Because there is a Duplicate Title, title fraud is here, it does occur and it is very hard to eliminate. Perhaps title fraud can be reduced by eliminating the CT with better safeguards and procedures in place? Pehaps someone can illuminate us on the current incidence of title fraud in Australia.

How hard is it, to forge the signature of the true owner to transfer the deed to himself? Or forge the signature of a bank official for that matter to discharge a mortgage? To obtain a replacement duplicate of title? To remortgage the title which is the most common title fraud?

Land Registry Victoria collect approximately $1000 for every transfer and $75 for every mortgage and discharge. Perhaps to alleviate fear, a percentage of fees paid can be placed into an indemnity fund. Or possibly in future there is a compulsory levy on every transaction so every property owner is covered by title insurance.

New regulations will require a tighter regime on identifying borrowers are the rightful owner of the security especially when executing the mortgage.

But we live in a fool's paradise if we think title fraud cant or wont happen simply because we have duplicate CTs.



Land title fraud - NSW Law Society Bulletin

In recent Caveats the Law Society has warned the profession about two types of land title fraud which have become apparent over recent times.

The first is the application for issue of new certificates of title by fraudsters pretending to be the registered proprietors. The fraudsters then borrow money against the property, thus seeking to give the innocent mortgagee title propriety over the innocent registered proprietor.

The second fraud relates to forged certificates of title. The forged certificates of title are of varied quality, and a number have apparently been registered.

In regard to the forged certificate of title, Land and Property Information NSW (LPI) is arranging for a much more secure form of certificate, which will include paper with a watermark, secure management of blank documents, foil crests, and individual numbering. These steps should prevent all but the most sophisticated forgeries.

In the meantime, solicitors should consider having certificates of title authenticated by the LPI before certifying title, particularly in matters where there is a refinance on otherwise unencumbered properties (although this is not the only indicator), or better still arrange to have the title deed produced at the LPI.

As to the fraudulent issue of certificates of title, practitioners should avoid witnessing any document unless they personally know the person to whose signature they attest. Solicitors need to be aware that fraudsters are able to obtain a false identity with the use of passports, driver’s licences and birth certificates. If a solicitor chooses to witness a document for a transfer of mortgage or other title documents, the solicitor should be very careful, and at least make copies of the documents upon which certification is relied.

If there is to be a refinance on unencumbered property, it may be worthwhile delaying payment pending registration of the dealings.

April 2003

Identity Fraud - 13 arrested in probe

The Age reports 12 July 2006

ONE of Australia's largest identity fraud syndicates has been smashed after allegedly stealing mail and corrupting bank employees to scam tens of millions of dollars from unsuspecting victims, police say.

Bogus NSW drivers' licences, Medicare cards and Australian passports have been intercepted by investigators, who say they were among the most sophisticated ever seized in Australia.

The gang's alleged mastermind, Oliver Yu, 22, from the northern Sydney suburb of Gordon, is among 13 people arrested in the past two months by the Identity Crime Task Force (ICTF) after a 12-month surveillance operation.

Nine men and one woman, aged 20 to 41, have been charged with 230 offences, and police have deported two Malaysian nationals and released one man pending further inquiries.

The syndicate is believed responsible for the theft of tens of millions of dollars, but police say they may never know the true extent of the gang's crimes.

The ring, recruited "runners" to steal personal information from unsuspecting victims, were specialists in stealing mail, credit card fraud or personal loans. The syndicate, which allegedly operated in NSW, Queensland, Victoria and probably WA and which had links to South-East Asia, allegedly used the identity of individuals and multinational companies, and also created false identities, to steal money from banks.

NSW Police Online - 'It has been alleged that people within the syndicate assumed the identity of individuals and companies as well as created false identities which were allegedly used to obtain money from a number of financial institutions.'

These gangs have specialists who produce the fake ID and documentation and others who execute the fraud. The take is then split amongst the participants paying commissions not unlike any other legitimate business.

Who bears the Loss?

1. The financial institution who has lent the money to the fraudsters. But more than likely they will hold a registered first mortgage


2. The real owner of the property whose property is encumbered and may have even lost their status as a registered proprietor through a fraudulent transfer


3. The land registry - through a claim on the indemnity fund


4. Legal Practitioners and their professional indemnity funds for their unwitting participation

Like all fiascos these things often play themselves out in the Courts.

As you can see – the duplicate CT provides scant protection when we are facing determined gangs of fraudsters of increasing sophistication in identity and document fraud.

Implausible, unthinkable, inconceivable, staggering belief

Having reported on the downright ill treatment Westpac dished out the other week, I get this heterodoxy in today's inbox -

"My name is Luke (surname supplied) from the CBA, today I recived (sic) the discharge of mortgage request from your office via mail. I have completed the request and forwarded this on to our discharge settlments (sic) office to complete, thank you for the discharge authority that was attached, if you have any questions prior to settlement I may be able to help.

Have a good day,

Luke
Discharge Officer
CBD Lending Support (3010 002)"

I picked myself up off the ground and emailed Luke straight back -

"Is this the new Commonwealth Bank – emailing the Lawyer – if its true – that’s a great step in the right direction"

Luke's response right back was -

"Sorry brett but this is just my thing, hopfuly (sic) it will catch on. i personaly (sic) are taking care of the the discharges through out the CBD area, but if there is any thing you need, use me as your point of contact, not just discharges, any question and the least i can do is point in the right direction.

Any way, have a good week

hear from you soon."

110% to Luke at the CBA for initiative - no its not a change in direction or policy at the CBA but one individual taking the initiative. Maybe, just maybe Luke's initiative may as he says catch on.

Vote to rebuild the twin towers

I dont usually get political - this link is to vote for the immediate rebuilding of the WTC. These two mighty reflective towers must emerge once again from the dust of ground zero.
Once they are back again, the face of the nation can be restored and terrorism will have failed for its utter stupidity.

Digital Mortgage & Loan Agreements - UCCC

The path to creating a uniform digital mortgage & loan regime in Australia is riddled with hurdles created by some states embracing the Electronic Transactions (ET) Act and other states specifically exempting the UCCC from the key ET Act.

As at July 2006:
The following states have embraced the acceptance of the digital mortgage & loan (by not creating a specific exemption under their local ET Act) -

• Victoria


• Tasmania


• ACT

The States that look to be transitioning to accept -

• New South Wales - amendments have been passed


• South Australia


• Queensland


• Western Australia

I certainly stand to be corrected on the status of the above. But what goes? Uniform Consumer Credit Code is really a tautology. But really, we have yet to see a Financial Institution embrace any form of digital or electronic mortgage or loan contract. I am certain however this will change.

Comm Bank offers conveyancing in WA

Anyone buying or selling in WA can now have their conveyancing performed by the Commonwealth Bank via a joint venture with Clayton Utz. Effectively the CBA is offering the home loan and the conveyancing together. At the moment the service is limited to WA.

Putting aside the potential conflict of interest that others will raise, in fact the interests of the mortgagee and the buyer are closely aligned. If the buyer's vested interest as the registered proprietor is flawed the mortgagee's interest as mortgagee would also be flawed. The mortgagee's interest is dependent on the buyer / borrower securing good clear title.

My question is how good is the service? I personally would not rate the service provided by any of the Big 4 financial institutions's mortgage & loan settlements' service as any higher than average and quite often below par. I would argue they will have to do better than that.

Conveyancing is often percieved as an under-rated service. Quite the opposite, clients value their lawyers input and advice in assisting managing and structuring their affairs from the family and business perspective. The routine part of conveyancing maybe just that, but it is part of the whole service the legal industry provides every day which clients value.

One point the FinReview article raised was the CommBank conveyancing service had slashed conveyancing fees in the west by 50%. No doubt many will be attracted by the price and the convenience factor.

The CommBank's website is eCommLegal

New Federalism

The Hon Peter Costello MP
Treasurer
of the Commonwealth of Australia

Dear Mr Costello,

Now that you are about to nationalise the State controlled Ports into a single National Ports Authority for the country's economic benefit, having already created the National Electricity Grid, the inland waterways would make a sensible target. Its been a long time since the waterways were used as transport routes given we now have national highways and rail links. You know and I know, it has been over 100 years since States could tax goods passing from one state to the next.

Also, how come England & Wales have a single combined Torrens land database but our State mandarins would argue we need to maintain eight provincial based databases? For that matter why haven't you combined the vehicle registration databases. Wouldn't that mean significant savings in overhead and the ability to track all those stolen vehicles. I believe our crime fighters understand the benefits of tracking criminal suspects when there is a little bit of interstate co-operation. This is not a complete list as you are probably hard working on the realignment of State boundaries into more relevant economic zones. When you have completed the above you have my vote. Anyhow, thanks for putting the issue back on the table.

Or perhaps these are the simple issues that we put to a referendum. Let the public decide.

1. Should the ports be under Commonwealth or State control?


2. Should inland waterways be under Commonwealth control?


3. Should we have a National Land & Property Register?


4. Should we have a National Vehicle Register?

Always happy to offer some unsolicited advice and support,

Yours Faithfully

Link to Age Article by William Birnbauer 06 August 2006
'Crazy' State System costing us billions

double commissions

Litigation sometimes arises involving the agents' commission of business agents and real estate agents. How does this arise? As put by a leading retired QC, Chester Porter: One often hears of people say, "Get lots of agents to sell your property." This advice can lead to trouble. After the sale, two agents each claim commission and often the vendor is in the purchaser's hands as to who was the effective cause of the sale. Some owners have finished up paying two commissions. Porter, who was a leading criminal barrister, says he found these cases difficult.

He makes another observation about the smart, small shopkeeper who kept three sets of books. The first was correct and showed the true position of the business. The second was for the Commission for Taxation and showed a somewhat reduced profit. The third showed a vastly improved profit and was for the prospective purchaser.

Now surely that doesn't happen.

Source Chester Porter - Walking on Water : A life in the Law

world cup 06

, originally uploaded by ...like a chimp with coconuts.